SAN FRANCISCO, Sept 19 (Reuters) – Some workers at Amazon’s ( AMZN.O ) once-famous hardware division – responsible for popular devices such as the Kindle reader and the Echo voice assistant – say morale at the division has suffered due to job cuts and reducing the number of employees. pipelines in the development of devices they fear are unlikely to be successful.
The division, known as Lab126, has been the focus of Amazon founder Jeff Bezos, who has portrayed it as an engine for future projects, but has recently been hit by mass layoffs and departures of key executives, including leader Dave Limp of 13 years. veteran who announced plans to step down later this year.
Reuters interviewed more than 15 current and former employees, who spoke on condition of anonymity because of their working conditions, who described a slew of new devices in development, many aimed at encouraging customers to use the once-groundbreaking Alexa voice service. which now faces a tough challenge in the age of generative AI and ChatGPT.
The company — the world’s largest online retailer — is holding a device and services event on Sept. 20, where it’s expected to introduce updated versions of some existing products, such as the Fire tablet, Fire TV stick and Kindle Scribe e-reader, among other announcements. . Reuters was unable to determine Amazon’s full plans for the announcement.
The intelligence agency was able to identify five different new devices in development. These include a carbon monoxide detector and a home energy monitor — both with Alexa built in — as well as a home projector that turns any surface into a screen. Some sources mentioned other projects, the full details of which could not be confirmed.
Amazon hopes consumers will install Alexa-enabled devices in more rooms of their homes and get used to using the system throughout the day, the sources said.
The company has also been working on an Alexa-enabled digital measurement device (for example, to map the dimensions of a home) and a virus-testing device originally designed to detect Covid, the people said.
Amazon is secretive about its internal projects at Lab126, which have long been key to its quest to become a technology innovator. Not all will be produced commercially, sometimes due to financial or market concerns, the sources said, while some have already been redesigned or canceled entirely.
Although the device unit is relatively small in Amazon’s sprawling empire, it has been symbolically important as a gadget testing facility and the public face of Alexa through voice devices. Amazon said its devices and services business is not profitable, without providing numbers.
An Amazon spokesperson declined to comment on products in development.
“To suggest that a few anecdotes paint a picture of reality for an organization as large and diverse as Facilities and Services is inaccurate,” spokeswoman Kinley Pearsall said in a written response to questions about morale and facilities at Lab126. “The business has been at the heart of innovation for more than a decade and has created a range of products that are a meaningful part of people’s everyday lives.”
Sources said years of losses at the lab and changes in strategy contributed to low morale. Many pointed to Astro’s home monitoring robot, which launched in 2021 and which, at $1,600, remains niche and has been criticized for giving some consumers goosebumps.
That followed a series of poorly-sold devices such as a watch with a voice assistant, the Fire smartphone and a camera that doubles as a personal stylist, the sources said.
Amazon, the people said, is struggling to address declining interest in its Alexa voice assistant nearly a decade after it was launched and as it faces competition from artificial intelligence chatbots from Alphabet’s Google ( GOOGL.O ) and a host of startups, including those backed by Microsoft. (MSFT.O) OpenAI. Since late last year, ChatGPT and other similar tools have dazzled consumers and investors with their ability to produce long, coherent text responses to complex prompts, a format that is difficult to translate into a voice assistant.
Amazon said it was developing its own generative AI to power Alexa, but didn’t reveal much beyond saying in August that “every one of our teams is working on building generative AI applications.”
Typically accessed through devices such as Amazon TVs and Echo speakers, Alexa provides spoken answers to questions and can be used to make purchases on Amazon’s online store. The company has also worked to make Alexa the center of home automation so that light bulbs and appliances can be controlled by voice.
But Amazon hasn’t been able to find a consistent way to capitalize on Alexa.
“Amazon’s ability to infiltrate consumers’ lives is limited because they don’t have control over the smartphone,” said Avi Greengart, president of analytics firm Techsponential. “Voice-first is not a great shopping experience,” he said.
EXODUS
Limp, who oversaw device strategy including Ring video doorbells, plans to exit by the end of the year. Amazon is set to succeed Microsoft’s Panos Panay, who oversaw Surface development, according to Bloomberg. Microsoft declined to comment and Amazon did not respond to a request for comment.
Limp succeeds longtime Lab126 director Gregg Zehr and Alexa senior vice president Tom Taylor, who both retired late last year. Ken Washington, who oversaw Astro, left for Medtronic in May after less than two years.
CEO Andy Jassy has been cutting Amazon’s workforce after roughly doubling it during the pandemic in response to a surge in online sales. The cuts also affected Amazon’s retail unit, cloud computing division, grocery and advertising.
Alexa employees were included in rounds of layoffs that began last year, resulting in 27,000 job cuts across Amazon. Despite the widespread popularity of Alexa’s voice assistant, with 71.6 million users in 2022, it fell behind Google and Apple’s ( AAPL.O ) Siri, which had 81.5 million and 77.6 million, respectively, according to analyst firm Insider Intelligence.
For years, Amazon has argued that it can sell devices at close to manufacturing costs and make a profit through the services offered on them. This works well with its Kindle group, as consumers who own an e-reader have been buying e-books for years, with Amazon taking a cut of each sale.
Alexa is another matter. Most of the monetization efforts have focused on making it easier to buy from Amazon.com. But the dozen or so people who worked on Alex say they haven’t seen strong evidence that customers are buying things they wouldn’t otherwise buy.
The challenge is for users like Bruno Borges, 40, of Vancouver, Canada, who said he found himself only using his Echo for his timer, music and weather updates.
“I would never shop on it because I can’t compare things like I can on the web, so I wonder if I’m getting the best deal,” he said. He recently put his three-year-old device in a drawer and has no plans to use it again.
Employees say management has shifted in recent years toward trying to make devices more cheaply to potentially make money selling the hardware itself.
That focus on price has caused delays for an advanced projector that Amazon is developing to beam images around the room and turn ordinary surfaces into screens, according to five people familiar with the matter.
Using the projector, the user could beam recipes onto the wall above the stove or make Zoom calls that follow them as they move. Amazon bought a startup called Lightform to help get the project off the ground, but decided to drop the cost of the projector, which Lightform previously offered from $700, by hundreds of dollars before it could be sold.
Reporting by Greg Bensinger; edited by Ken Li and Claudia Parsons
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